GE: Better Incentives Needed to Stimulate Water Reuse and Recycling

Regardless of the incentive type, experience shows that incentives are most effective when implemented within a regulatory structure that already exists and functions well, according to the company's white paper.

Mar 24, 2011

One of the best ways to stretch Earth's supply of available water is through increased reuse and recycling, yet progress in these areas has been limited for a host of economic, political and social reasons.

One major stumbling block is a lack of effective incentives, according to a new white paper to be issued by GE during its Water Summit: From Used to Useful ─ Middle East on April 5-6 in Saudi Arabia. The paper describes the multifaceted nature of the problem and highlights various incentive policies and structures from around the world to illustrate those that have encouraged water reuse and recycling.

“Our goal is to stimulate action to preserve fresh water supplies,” said Heiner Markhoff, president and CEO —Water and Process Technologies for GE Power & Water.

It says that regardless of the incentive type, experience shows that incentives are most effective when implemented within a regulatory structure that already exists and functions well. For example, Singapore’s goal is to use reclaimed water as a key part of its water supply. The island city-state merged several governmental units into a centralized Ministry of Environment and Water Resources, and it has been a major factor in helping the country realize a 30 percent water reuse rate.

Some of the specific incentive structures and approaches detailed in the white paper include:

Water pricing/discharge fees. Raising the price of water isn’t always an option, but sometimes it can be used to reflect water scarcity or to incorporate external environmental costs. New York City offers one example where a reduction in the price for water, based on the volume consumed, can drive reuse. Buildings with a comprehensive water reuse system (CWRS) that meet water-usage targets are granted a 25-percent rate reduction on water and sewer charges, which can amount to millions of dollars in reduced operating costs for large users. A CWRS building captures, treats, and recycles sanitary wastewater or wastewater from showers, clothes washers, etc.

Water quality and demand trading. Water quality trading programs allow firms with high pollution-abatement costs to purchase pollution reduction credits from other firms or sources with lower abatement costs. Similar programs can be implemented with respect to water demand. For example, when a drought in Australia’s Murray-Darling Basin in the 1980s reduced farmers’ water entitlements to 10-20 percent of normal, many quickly opted to trade the limited water allocations they received rather than attempt to plant a crop with insufficient resources.

Tax financing/public grants. Governments can help improve the economics of investments in water reuse via incentives and financing using various tax credits, exemptions, and grants. Noting the significant growth in the renewable energy sector over the past several years driven by production tax credit/investment tax credit programs, the white paper discusses in detail the many parallels and opportunities in the water sector.

Public-private partnerships. Public water utilities still provide most water and wastewater services worldwide, but public-private partnerships (PPPs) are increasingly viewed as an effective means of stimulating investment in water reuse infrastructure. The number of people served by private companies grew from 51 million people in 1990 to nearly 300 million by 2002. Especially in areas such as the arid western United States, where new communities are cropping up in areas where basic water infrastructure doesn’t yet exist, private operators often can provide the type of decentralized, ad hoc solutions necessary to meet such demand.

According to a GE spokesperson, the white paper will be made publicly available after the summit and the company will provide access details at that time.

GE serves the energy sector by developing and deploying technology that helps make efficient use of natural resources. With more than 90,000 global employees and 2010 revenues of $38 billion, GE Energy comprises GE Power & Water, GE Energy Services and GE Oil & Gas, which work together to provide integrated product and service solutions in all areas of the energy industry including coal, oil, natural gas and nuclear energy; renewable resources such as water, wind, solar and biogas; and other alternative fuels.